G.R. No. 264439 - Sampana vs. The Maritime Training Center of the Philippines, et al.

Case Summary (G.R. No. 264439)

Key Dates

Engagements began: March 21, 2011.
Alleged continuous consultancy period: March 21, 2011 – March 20, 2014.
Alleged fixed-term employment period: March 21, 2014 – December 21, 2016 (with successive three-month renewals).
Notification letters by Sampana re: intent to retire: November 8 and November 24, 2016.
Alleged dismissal / non-renewal: December 21, 2016.
Sampana turned 60: February 16, 2016; turned 65 (compulsory retirement): February 16, 2021.
Final Supreme Court decision: February 26, 2024.

Applicable Law and Constitutional Basis

Constitution: 1987 Philippine Constitution — in particular, the constitutional protection of labor and security of tenure (referenced by the Court, e.g., CONST. art. XIII, sec. 3).
Labor Code provisions cited: Article 280 (renumbered as Article 295) on regular and casual employment; Article 287 (renumbered as Article 302) on retirement pay; Article 111 on attorney’s fees; statutory and jurisprudential standards on fixed-term contracts (Brent, Fuji, Samonte) and remedies for illegal dismissal (reinstatement or separation pay; backwages).

Factual Background and Parties’ Contentions

Sampana’s position: Initially engaged under a three-month “Consultancy Agreement” (repeatedly renewed from March 21, 2011 to March 20, 2014). Thereafter, his engagement was labeled “Employment with a Fixed Term,” also repeatedly renewed every three months until December 21, 2016. He claimed continuous employment exceeding five years, sought optional retirement benefits after turning 60, and alleged he was dismissed without just cause on December 21, 2016. He sought relief including illegal dismissal damages, retirement benefits, 14th month pay, and related claims.
TMTCP’s position: Characterized Sampana’s initial engagements as consultancy (no employer-employee relationship) and subsequent terms as valid fixed-term employment agreed by the parties. TMTCP maintained that Sampana’s contracts were limited to training courses of three months’ duration, that non-renewal followed complaints about his teaching, and that Sampana therefore was not illegally dismissed nor entitled to retirement pay or other claimed benefits.

Labor Arbiter’s Ruling

The Labor Arbiter (Decision dated August 31, 2017) found Sampana to be a regular employee under Article 280 (now Article 295) and awarded retirement pay (calculated for service from March 21, 2011 to December 21, 2016). The arbiter dismissed the other claims (except retirement pay) and concluded Sampana had opted to retire, not been illegally dismissed.

NLRC Ruling

The NLRC reversed the labor arbiter as to retirement pay (Decision dated June 26, 2018). It held that Sampana’s consultancy period (March 21, 2011 – March 20, 2014) did not create an employer-employee relationship and that his subsequent three-month fixed-term contracts (March 21, 2014 – December 21, 2016) were valid fixed-term engagements knowingly agreed upon, not a circumvention of security of tenure. Accordingly, the NLRC deleted the award of retirement pay and otherwise affirmed other aspects.

Court of Appeals Ruling

On certiorari, the Court of Appeals affirmed the NLRC (Decision dated March 18, 2021), finding that the three-month fixed-term contracts were knowingly and willingly agreed to, that the parties dealt on the basis of equal terms such that moral dominance did not vitiate consent, and that Sampana was therefore not a regular employee entitled to retirement benefits under the Labor Code.

Issues Presented to the Supreme Court

Whether Sampana was a regular employee of TMTCP.
Whether Sampana was illegally dismissed.
Whether Sampana was entitled to backwages and retirement benefits.

Supreme Court’s Analysis on Employment Status

Legal standard: The Court applied the established tests for employer-employee relationship (four-fold test with emphasis on the control test) and recalled that courts will scrutinize fixed-term arrangements where they appear to circumvent security of tenure (Brent; Fuji). The Court also recognized that the resolution of pure factual findings typically rests with labor tribunals, but where conflicting findings exist between the labor arbiter and NLRC and appellate review is properly invoked, the Court may reassess the record.
Consultancy label scrutinized: The Court examined the written “Consultancy Agreements” and TMTCP’s Quality Management System Records Manual (which defined Instructor functions and responsibilities). The Court found the label “consultant” to be a misnomer because the documented duties closely matched those of an instructor employed to deliver training required by regulatory bodies (MARINA STCW standards). The agreements required coordination with training/course directors and detailed work hours; the Quality Manual showed instructor responsibilities including preparing lesson plans, teaching according to approved guides, constructing tests, preparing reports, and other supervisory instructional duties.
Indicators of employment: The Court emphasized that the substance of the engagement, not the title, determines status. Repeated and uniform three-month engagements with identical terms over years, performance of functions necessary and desirable to TMTCP’s business, lack of evidence that Sampana independently exercised control over manner and method of his duties, and the absence of deductions and tax/benefit treatment consistent with an independent contractor (though the consultancy agreements referenced withholding tax treatment) were considered. The Court found that the overall circumstances demonstrated that Sampana’s services were necessary and desirable to TMTCP’s business and that the patterned renewals were indicative of employment rather than bona fide consultancy.
Power imbalance and circumvention: The Court concluded that the successive uniform short-term contracts were a scheme to prevent acquisition of regular status and that Sampana had not negotiated the contracts on equal footing nor demonstrated independent bargaining power sufficient to negate moral dominance. The Court invoked jurisprudence (Fuji, Brent, Samonte) that compels striking down fixed-term arrangements when they are used to circumvent security of tenure.
Conclusion on status: The Court held that Sampana was a regular employee of TMTCP from March 21, 2011 until his dismissal on December 21, 2016.

Supreme Court’s Ruling on Illegal Dismissal and Remedies

Illegal dismissal: Because Sampana was a regular employee, his termination by non-renewal of the fixed-term engagement, purportedly due to complaints, was effectively a dismissal without just or authorized cause and without observance of due process (two-notice rule and hearing). The Court therefore declared the termination illegal.
Reinstatement vs. backwages: Reinstatement was rendered impossible by Sampana’s attaining compulsory retirement at age 65 on February 16, 2021. The Court awarded full backwages computed from the date of illegal dismissal (December 21, 2016) up to February 16, 2021 (the date of compulsory retirement).
Attorney’s fees: The Court awarded attorney’s fees equivalent to 10% of the total monetary award pursuant to Article 111 of the Labor Code. Because Sampana is represented by the Public Attorney’s Office (PAO), the award is to be remitted to PAO as a trust fund to be applied for PAO officials’ and lawyers’ special allowances in accordance with relevant statutes and rules.
Interest: The total monetary award shall earn legal interest at 6% per annum from finality of the Supreme Court decision until fully paid.
Remand: The case is remanded to the labor arbiter for computation of the precise monetary amounts.

Supreme Court’s Ruling on Retirement Benefits

Legal standard: Article 302 (renumbered Article 287) of the Labor Code (as amended) provides retirement pay equal to one-half (1/2) month salary for every year of service (the half-month computed at 22.5 days) for employees who have worked at least five years prior to retirement; the requirement applies equally to optional retirement at age 60 and compulsory retirement at age 65.
Finding: Because Sampana was deemed a regular employee retroactive

Case Syllabus (G.R. No. 264439)

Case Caption, Nature and Relief Sought

G.R. No. 264439, decided February 26, 2024 by the Supreme Court, Second Division; petitioner: Ramon O. Sampana; respondents: The Maritime Training Center of the Philippines (TMTCP), Captain Alejandro C. Aquino, Jr. (CEO/President), and Normandy E. Gualberto (Administration and Finance Manager).
Petition for Review on Certiorari assailing Court of Appeals dispositions in CA-G.R. SP No. 158622 (Decision dated March 18, 2021 and Resolution dated October 20, 2022).
Relief sought by petitioner in original complaint: declaration of illegal dismissal, declaration of regularization, payment of retirement benefits, 14th month pay, training fees, separation pay, damages, and attorney’s fees.

Chronology and Essential Facts of Employment

Initial engagement: petitioner hired as "Instructor" under a document captioned "Consultancy Agreement" effective 21 March 2011 to 21 June 2011 with monthly fee of PHP 25,000.00; consultancy agreement repeatedly renewed every three months until 20 March 2014.
Subsequent engagement: contract captioned "Employment with a Fixed Term" beginning 21 March 2014 to 21 June 2014 with monthly gross compensation stated as PHP 27,000.00; fixed-term contracts likewise renewed every three months until expiration on 21 December 2016.
Petitioner’s age and retirement correspondence: petitioner turned 60 on 16 February 2016; he wrote to TMTCP on 8 November 2016 (inquiring about retirement benefits and stating he had worked five years and seven months as of 21 October 2016) and on 24 November 2016 (notifying preference to retire after five years and eight months and reiterating query about retirement benefits).
Termination sequence: petitioner’s last contract allegedly expired on 21 December 2016 and TMTCP did not renew; petitioner states dismissal occurred on 21 December 2016 and he was required to sign an Employee Clearance Form with Release, Waiver and Quitclaim on 22 December 2016.
Pay detail anomalies: earlier consultancy fee stated at PHP 25,000; fixed-term contract monthly gross at PHP 27,000; Court of Appeals observed payslips for Sep–Dec 2016 showing monthly compensation at PHP 27,500 (as noted in appellate discussion).

Respondent Employer’s Position and Defense

TMTCP’s characterization: an educational institution / maritime training institution (MTI) providing basic safety courses and assessment of seafarers’ competence; TMTCP asserts petitioner was engaged initially as consultant then by agreement as fixed-term employee for discrete three-month periods.
Stated reasons for non-renewal / termination: trainee complaints about petitioner’s manner of conducting classes and allegedly unsatisfactory service; TMTCP contends these justified non-renewal rather than illegal dismissal.
Legal contentions: consultancy period should be excluded from computation of tenure for retirement because no employer-employee relationship existed; fixed-term agreements were valid and voluntarily agreed; 14th month pay is discretionary and not an enforceable right.

Procedural History Through the Tribunals

Labor Arbiter (Decision dated 31 August 2017): found petitioner to be a regular employee and awarded retirement pay computed at PHP 116,775.00; other claims (illegal dismissal, 14th month pay, training fees) were dismissed.
- Labor Arbiter’s retirement computation (as reflected in decision): Retirement Pay covering service 3/21/11 to 12/21/16 = 5 years; used divisor 26 to compute daily rate from PHP 27,000; applied 22.5 days and 5 years to arrive at PHP 116,775.00.
National Labor Relations Commission (NLRC) (Decision dated 26 June 2018): on partial appeal by respondents, deleted the award of retirement pay for lack of legal and factual basis and held that the consultancy period (3/21/11–3/20/14) did not constitute employer-employee relationship and that petitioner was a series of fixed-term employees from 3/21/14 to 12/21/16.
Court of Appeals (Decision dated 18 March 2021; Resolution dated 20 October 2022): affirmed the NLRC’s finding that petitioner was a fixed-term employee and that he failed to meet the five-year service requirement for optional retirement; denied petitioner’s motions for reconsideration.
Supreme Court petition: petitioner sought to reverse the Court of Appeals’ rulings on status and retirement entitlement; respondents argued factual issues not proper under Rule 45 and that fixed-term contracts were valid.

Issues Presented to the Supreme Court

Whether petitioner was a regular employee of TMTCP.
Whether petitioner was illegally dismissed.
Whether petitioner is entitled to backwages and retirement benefits (and ancillary remedies such as attorney’s fees).

Legal Tests, Statutory Provisions and Jurisprudential Authorities Applied

Four-fold test / control test for employer-employee relationship: (1) selection and engagement; (2) payment of wages; (3) power of dismissal; (4) power to control the employee’s conduct—the power of control being the most significant determinant.
Article 295 [renumbered Article 280] of the Labor Code (definition of regular and casual employment): regular where employee performs activities usually necessary or desirable in employer’s usual business; also renders regular status if employee has rendered at least one year of service, continuous or broken, with respect to the activity.
Article 302 [renumbered Article 287] of the Labor Code (retirement pay as amended by R.A. 7641): retirement benefit equivalent to one-half month salary for every year of service (computed as 22.5 days) provided employee has worked at least five years with employer prior to retirement; two types: optional retirement at age 60 and compulsory retirement at age 65.
Article 111 of the Labor Code (attorney’s fees): attorney’s fees not to exceed ten percent of wages recovered; unlawful to demand fees exceeding ten percent.
Relevant jurisprudence cited and applied: Brent School, Inc. v. Zamora (on fixed-term contracts and circumvention of security of tenure); Fuji Television Network, Inc. v. Espiritu (fixed-term contractual status does not preclude regularization where circumstances show necessity/desirability and repeated renewals); Samonte v. La Salle Greenhills, Inc. (contracts prepared by employer and repeated renewals can ind